In Search Of Canadian Dividends: Part II

As I stated in the first article of this series, I am on the hunt for broad based exposure to Canadian dividend payers. Preferably companies that continue to raise their dividend most years. But I also realize the value of consistent high yielders that don't necessarily raise their dividend. These companies (and yield) can certainly add to a portfolio's returns over the mid and long-term.

And in the end I will continue with an ETF strategy, perhaps sprinkling in a handful of companies that the dividend indexes have overlooked. I currently use the Canadian ETF XEI from ishares to boost my Canadian dividend exposure. I am considering directing much of the investment income in one of my accounts to XEI, as I outlined in this article entitled "Dividend Growth and Asset Allocation Together at Last". XEI has a yield near 5% and a dividend growth rate of 8% over 5 years. Not too bad as a dividend proxy, but of course it is certainly a yield chaser. I would love to balance that out with more dividend growth.

And as I pointed out in the first article, Canada provides some slim pickin's on the dividend growth front, especially compared to the U.S. Those looking for a well-rounded dividend growth portfolio should certainly build around those U.S. based dividend aristocrats and champions. I use the Dow Jones index (NYSEARCA:DIA) for my U.S. equity exposure, as I outlined in this article, but will also admit that provides a weak to mediocre dividend growth proxy.

And without further adieu here is part two of my Canadian dividend exploration. I have plotted the dividends and dividend growth rates (OTCPK:CAGR) and duration. I am not a dividend purist, given that true dividend aristocrats are hard to come by in Canada. Meaning, some of these dividend growth durations may have been temporarily interrupted by a dividend cut, or dividend stall.

From there I ran projections to estimate the total income each company would generate over a 15-year period with those dividends being reinvested at their current growth rate. I then ordered them by companies that would generate the highest yield over that 15 year period. Please note that there is no guarantee that a company can continue to pay, or maintain its dividend growth rate. Yields and growth rates have not been updated since I began this evaluation a few weeks ago. And I do invite your scrutiny with respect to these figures. Here's the next 49 Canadian dividend payers.

Company

Current Yield

Dividend CAGR

Period

Bird Construction

5.1%

10.0%

5 years

CIBC

4.6%

10.0%

10 years

PennWest Exploration

10.6%

Erratic

na

TD Bank

3.77%

12.0%

15 years

Mullen Group

4.6%

9.6%

10 years

Dorel Industry

3.3%

13.5%

6 years

Bell Canada

5.4%

7.4%

10 years

Magna Int.

2.1%

18%

5 years

BMO Financial

4.6%

8.9%

10 years

Andrew Peller

3.9%

9.0%

5 years

Petrobakken

9.6%

0%

na

Ensign Energy

2.8%

14.4%

13 years

Ag Growth Int

6.7%

4.2%

7 years

Shaw Comm

4.2%

6.2%

5 years

Exchange Income

6.1%

4.9%

7 years

Accord Financial

4.4%

8.4%

5 years

Pembina Pipeline

5.5%

5.5%

8 years

Manitoba Tel

5.3%

5.9%

15 years

Corus Entertainment

4.0%

8.9%

5 years

Shoppers Drug Mart

2.5%

14.0%

5 years

Great West Life

5.0%

6.2%

17 years

Baytex Energy

6.0%

3.9%

10 years

Transalta

7.4%

1%

15 years

Easy Home Limited

4.7%

6.3%

5 years

Canadian Western Bank

2.3%

16.5%

10 years

Keyera

4.3%

7%

10 years

Emera

3.9%

7.6%

15 years

Pizza Pizza

7.2%

0%

na

Artis REIT

7.0%

0%

na

Interpipeline

4.74%

4.5%

10 years

Club Link

3.3%

7%

7 years

Enbridge

2.9%

9.5%

17 years

Fortis Inc

3.6%

6.7%

16 years

Northland Power

5.72%

0%

na

Dundee REIT

5.9%

0%

na

Finning Int

2.2%

12%

8 years

Cineplex

4.2%

3.74%

2 years

Petrominerales

5.7%

0%

Thomson Reuters

4.4%

3.0%

6 years

RioCan REIT

5.0%

1.15%

8 years

Pason Systems

2.7%

10.0%

10 years

Calloway REIT

5.2%

0%

na

First Capital

4.4%

2.1%

10 years

TransCanada

3.6%

3.85%

15 years

Boardwalk REIT

3.0%

6.0%

8 years

Intact Insurance

2.48%

8.15%

3 years

Canadian Utilities

2.4%

6.3%

10 years

Corby Distilleries

3.9%

3.2%

5 years

Click to enlarge

The first thing that struck me when I went through this exercise and "ranked" the companies, is that my individual company holdings are near the bottom of the list. I have been transitioning to an all index ETF portfolio over several years. I now only hold three companies - TransCanada Pipelines (NYSE:TRP), Enbridge (NYSE:ENB) and Tim Hortons (THI). That said, those three companies have performed beyond expectations on total return. Over the last several years those companies have delivered in the area of 150% on total return.

They're great businesses but they certainly don't provide combination of yield and growth that many dividend growth investors are looking for. And I did not even put Tim Hortons on the list. Tim's yield is currently 2%, though they did raise their dividend by a healthy 24% just a few weeks ago. I bought Tim's many years ago when I worked on the business, hoping (or confident) that they would fill in Canada on every street corner and then return most of the cash to shareholders. That seems to be playing out. I will continue to hold Tim's and TRP and ENB. I think those three companies will pitch in and pay for a few weeks (every year) for my wife and I to sit on a beach in the French Riviera.

Enjoy the list. I will be back to analyze how these companies are distributed in the Canadian dividend ETFs. And I'll also offer some suggestions for U.S. readers on how to juice up their dividend growth portfolios. There's nothing like a little international diversification.

And I do invite your scrutiny with respect to this list. When researching dividends and especially dividend growth, one will find different numbers from almost every source. That's why it is crucial to use your own trusted source, and confirm your numbers with other sources. And then go to the company (site or investor relations) and find their dividend history. You will find a dividend growth (OTCPK:CAGR) calculator at investopedia.com.

And better yet, and in the end, buy an ETF or two. I'm guessing that I will be almost completely covered by XEI, Vanguard's Canadian Dividend ETF - VDY and my REIT ETF.

For my American friends (and with the help of a notable SA Dividend Growth investor or two who reside State-side) we'll put together a Canadian list of companies worth considering.

Disclosure: I am long DIA, ENB, TRP, THI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.